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2 years ago

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Budweiser, miller and coors, who together produce 80% of all beer consumed in the us, each spend well over $500 million a year o

n television advertising campaigns, promoting their beer brands.

1 answer:

Oksi-84 [34.3K]2 years ago

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Dinklage corp. has 6 million shares of common stock outstanding. the current share price is $84, and the book value per share is

Ann [662]

The answers to the questions are given below.

A. The company's capital structure weights on a book value basis are:

Equity = 9.84%
Debt = 90.16%

B. The company's capital structure weights on a market value basis are:

Equity = 64.55%
Debt = 35.45%

<h3>What is the calculations about?</h3>

A. The company's capital structure weights on a book value basis are:

Firm's Outstanding common stock = 6 million shares

Current share price = $84

Book value per share = $5

Hence, Total equity book value = $30 million (6,000,000 x $5)

Total equity market value = $504 million (6,000,000 x $84)

First bond's face value = $145 million

Coupon rate = 5%

Selling price = 95% of par

Market value of first bond = $145 x 95%

= $137.75 million

The Second bond's face value = $130 million

Coupon rate = 4%

Market value = $130 x 107% = $139.1 million

Total market value of bonds = $276.85 million ($137.75 + $139.1)

Book value of bonds = $275 million ($145 + $130)

Therefore, the company's capital structure by book value:

Equity = $30 million

Debt = $275 million

So, Total firm's value = $305 million

Hence:

Equity = $30/$305 x 100 = 9.84%

Debt = $275/$305 x 100 = 90.16%

B. Hence company's capital structure by market value:

Equity = $504 million

Debt = $276.85 million

Total firm's value = $780.85 million

Therefore:

Equity = $504/$780.85 x 100 = 64.55%

Debt = $276.85/$780.85 x 100 = 35.45%

See full question below

Dinklage Corp. has 6 million shares of common stock outstanding. The current share price is $84, and the book value per share is $5. The company also has two bond issues outstanding. The first bond issue has a face value of $145 million, a coupon rate of 5 percent, and sells for 95 percent of par. The second issue has a face value of $130 million, a coupon rate of 4 percent, and sells for 107 percent of par. The first issue matures in 24 years, the second in 9 years. Both bonds make semiannual coupon payments.

Required:

a. What are the company's capital structure weights on a book value basis?

b. What are the company's capital structure weights on a market value basis?

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4 0

1 year ago

Jason is going to play golf this afternoon and has to choose between two different golf courses. The greens fees to play each ar

yuradex [85]

Answer:

$4

Explanation:

the relevant total cost is 4 dollars

3 0

2 years ago

Most amateur athletes eventually become professional athletes.<br> True<br> False

andrey2020 [161]

Answer:

False

Explanation:

6 0

2 years ago

Your client, beth, has a home in california with a first and second mortgage. she's looking for a vacation home and has asked if

slega [8]

If my client Beth has a home in California with a first and second mortgage and is looking for a vacation home and asks if she can deduct mortgage interest, I would suggest obtaining a mortgage secured by the second home and deducting the interest from the loan.

Mortgage interest settled on a second home used personally is deductible as long as the mortgage fulfills the exact prerequisites for deductible interest as on your primary home, and if the second home is put on for rent, the loan taken for the second home will not have a limit for the deduction of interest payment.

Vacation Home with Second house mortgage

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4 0

1 year ago

The Dell Corporation borrowed $ 10,000,000 at 5% interest per year, which must be repaid in equal EOY amounts (including bot

Dvinal [7]

Answer:

- Dell must repay $1,728,198.18 at the end of each year.

- $2,097,387.29 out of the total repaid amount is interest expense.

Explanation:

- EOY equal repayment calculation:

We apply the present value formula for annuity to calculate the equal repayment amount Dell needs to make in the next 7 years.

Denote C is equal repayment, PV is present value of the loan which is $10 million, i is interest rate which is 5%, n is the number of repayments which is 7.

We have: C = (PV x i) / [ 1 - (1+i)^-n] => C = (10,000,000 x 5%) / ( 1 -1.05^(-7)) = $1,728,198.18.

- Interest expense calculation:

Total repayment made: 1,728,198.18 x 7 = $12,097,387.29.

Total interest expense = Total repayment made - principal amount = 12,097,387.29 - 10,000,000 = $2,097,387.29

8 0

2 years ago